House Speaker Kevin McCarthy (R-Calif.) delivers a speech on the economy

House Speaker Kevin McCarthy (R-Calif.) delivers a speech on the economy at the New York Stock Exchange on April 17, 2023.

(Photo: Timothy A. Clary/AFP via Getty Images)

McCarthy to Wall Street: GOP Will Hold Economy Hostage to Cut Aid Programs

"McCarthy went to Wall Street to spread Republicans' message to billionaires and corporate executives: They want hardworking families to pay the cost of keeping the government up and running."

U.S. House Speaker Kevin McCarthy told the New York Stock Exchange on Monday that his caucus will not pass legislation to raise the debt ceiling unless it includes steep federal spending cuts and work requirements for key aid programs, a position that Democratic lawmakers slammed as dangerous and foolish hostage-taking.

"There never has been and never will be anything fiscally responsible about refusing to pay America's bills, risking millions of jobs, or threatening economic ruin," said Rep. Brendan Boyle (D-Pa.), the top Democrat on the House Budget Committee. "Republicans have apparently learned nothing from their past failures, so I'll make it clear: The best thing they can do for the American people is to let the hostage go, stop the chaos, and end this reckless brinksmanship with a vote for a clean raise of the debt ceiling."

The Wall Street audience, though, applauded McCarthy's (R-Calif.) speech, in which he attempted to blame President Joe Biden for a looming debt default that would have catastrophic impacts on the U.S. and global economies. McCarthy also pledged to oppose any new tax increases, a message that appeared to go over well on Wall Street.

"Speaker McCarthy went to Wall Street to spread Republicans' message to billionaires and corporate executives: They want hardworking families to pay the cost of keeping the government up and running, while corporations get away with paying as little as possible in taxes—and they're willing to hold our entire economy hostage to get it done," Sen. Elizabeth Warren (D-Mass.) said in a statement.

"House Republicans' proposed budget cuts threaten economic disaster and American jobs, all to protect billionaires and giant corporations," Warren continued. "Independent analysis from Moody's shows congressional Republicans' budget cuts could throw 720,000 to over 2.5 million Americans out of work. That's a nonstarter. President Biden must hold firm on behalf of working families, and insist Republicans raise the debt limit swiftly and cleanly as they did time and time again under President Trump."

Biden has repeatedly called for legislation that raises the debt ceiling without any accompanying conditions, but the House Republican majority has insisted on reverting federal spending to fiscal year 2022 levels—which would force painful spending cuts across a range of programs, from housing to education to healthcare.

McCarthy repeated that demand Monday, telling the NYSE that the House will vote in the coming weeks on a bill that would raise the debt ceiling for a year, cap federal spending at FY 2022 levels, and limit spending growth over the next decade to 1% annually.

"If you agree, join us," McCarthy told the Wall Street audience. "Join us in demanding a reasonable negotiation and responsible debt ceiling agreement that brings spending under control."

The Republican leader said the GOP measure will also include new work requirements for recipients of federal nutrition assistance and Medicaid—mandates that experts say could deprive millions of families of food aid and health coverage. (Most SNAP and Medicaid recipients who are able to work already do so.)

McCarthy accused the Biden administration of weakening work requirements, an apparent reference to the administration's 2021 decision to rescind Trump-era guidance that gave states a green light to attach work requirements to Medicaid benefits.

But as Joan Alker of the Georgetown University Center for Children and Families pointed out in response to McCarthy's remarks, "There were no Medicaid work requirements in effect when Biden took office."

"In 2018, Arkansas briefly implemented Medicaid work requirement, which was a disaster, didn't promote work, but did create lots of red tape, and caused 18,000 to lose their health coverage," Alker wrote on Twitter. "A federal court stopped it. Appeals court upheld the ruling and no other state implemented [work requirements for Medicaid]."

McCarthy insisted that "trillions" of dollars in federal spending would be cut under the GOP's plan and demanded that the president meet with him to negotiate, but the Republican leader offered few specific details in his Monday speech.

"The speaker doubled down on the MAGA majority's threats to hold the economy hostage and keep the nation from paying its bills, but couldn't even articulate the ransom demands," said Liz Zelnick, director of Accountable.US' Economic Security and Corporate Power program. "McCarthy offered nothing by vague promises of a plan with unspecified spending cuts, a guarantee big corporations won't pay a penny more in taxes, and no assurances he even has enough votes to pass it in the House."

"While MAGA extremists in Congress can't seem to agree on the degree to which to punish seniors, workers, and low-income Americans with cuts to crucial safety nets," Zelnick added, "they're in complete alignment that no billionaire or profiteering corporation should pay their fair share."

According to the Congressional Budget Office, the U.S. will default on its debt for the first time ever this summer if Congress doesn't raise the limit, a looming disaster that top economists have said is "frightening."

In 2011, when Biden was vice president, the U.S. credit rating was downgraded after the GOP obstructed efforts to lift the debt ceiling. Republicans ultimately secured a deal with the Obama administration to impose federal spending cuts in exchange for a debt ceiling increase, an agreement that undermined the U.S. economy's recovery from the Great Recession.

"House Republicans instigated the first-ever downgrade in America's credit rating, spiking costs for working families and bringing the United States to the brink of a devastating recession," Boyle said Monday. "Almost 12 years later, Speaker McCarthy and extreme MAGA Republicans are dragging our nation down the same treacherous path."

"The speaker's blatant attempt to dodge responsibility and shift blame," Boyle added, "only underscores that the greatest threat to our nation's economy, the well-being of American families, and our record-breaking recovery is Speaker McCarthy and his MAGA allies."

Our work is licensed under Creative Commons (CC BY-NC-ND 3.0). Feel free to republish and share widely.